Download UvA PowerPoint - Accounting (for students)

Accounting 2016-2017
P 6011P0148 / PE 6011P0150
Tutorials Amsterdam Business School
Slides online
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katalinbuzasi.weebly.com
Page: Accounting (for students)
Password: ABS2016
Accounting week 45
2
Where are we?
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Last week
 Working with financial statements
 Understanding the relation between financial
stetements
Today (the aim of T2)
 Start to work with accounts
 Understanding the logical structure of accounts
 Going into deep
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Current assets
Noncurrent assets
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Contents
Today
 CH4: P4.21, P4.26
 CH5: P5.29, P5.33
 CH6:E6.18, P6.28
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The logic of financial accounts
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Each line in the balance sheet and income statement
has an account where we register the changes
(increase and decreas) related to that line
Main account types (how do they work?, what is their
relationship with financial statements?)
 Asset accounts
 Liabilities accounts
 Owners equity accounts
 Revenue accounts
 Expense accounts
Other account types
 Contra accounts
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The structure of accounts
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P4.21 (page 125-126)
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The aim is to practice how to use accounts to
register simple economic events
Understand the logic of accounts based on real
examples
Practicing the journal entry method
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P4.21 (page 125-126)
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A.) Issued 100,000 shares of $5 par value
common stock for $500,000 in cash.
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B.) borrowed $250,000 from Oglesby National
Bank and signed 12% note due in three years.
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C.) Incurred and paid $190,000 in salaries for
the year.
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D.) Purchased $320,000 of merchandise
inventory on account during the year.
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E.) Sold inventory costing $290,000 for a total
of $455,000, all on credit.
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F.) Paid rent of $55,000 on the sales facilities
during the first 11 month of the year.
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P5.29 (page 176)
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Practicing how to register bad debt
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Simple example for bad debts
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1st May 2015-The company sells inventory of
$60,000 for $100,000 on account
 The company expects that 5% of the sales will
not be collectable
6th August 2015-It turns out that 3% of the sales
on 1st May is really uncollectible
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P5.33 (page 178) – evaluating/costing
inventories
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Inventory records: FIFO and LIFO method with
periodic and perpetual system
 Periodic: costs of goods sold are calculated
at the end of the period
 Perpetual: costs of goods sold are calculated
when sales are made
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Information on inventory
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Tasks
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Calculate the value of costs of goods sold and the
ending inventory under the periodic system with
FIFO methods
Calculate the value of costs of goods sold and the
ending inventory under the periodic system with
LIFO methods
Calculate the value of costs of goods sold and the
ending inventory under the perpetual system with
FIFO methods
Calculate the value of costs of goods sold and the
ending inventory under the perpetual system with
LIFO methods
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E 6.18 – goodwill
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Practice example (Book, page 200)
A company bought another company for
$1,000,000 cash and assuming a note payable
liability of $100,000. The bought company had
equipment of $200,000, inventory of $250,000
and the notes payable of $100,000. Record the
changes in the buying company’s accounts.
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Solution
Dr. Inventory
Dr. Equipment
Cr. Cash
Cr. Notes payable
Dr. Goodwill
250,000
200,000
1,000,000
100,000
650,000
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E 6.18
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P6.26 (page 222)
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How to record depreciation?
Understanding the methods of depreciation
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Straight-line
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Accelerated
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Information on equipment
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